Following hot on the heels of his blockbuster physical gold ETF, which at times has been trading at a premium as high as 30% over NAV, indicating the willingness of investors to pay over fair value just to know that their asset claims wouldn't be diluted to nothingness on a moment's notice (here's looking at you GLD), the Canadian asset manager is launching a comparable physical ETF, this time investing with silver: the Sprott Physical Silver Trust. This is not looking good for the LBMA and JPM - since the silver market is allegedly even tighter than gold, yet just as manipulated by JPM and the LBMA (as evidenced by our earlier post on intraday gold prices) and locating physical can be far more problematic, the elimination of a few thousands tonnes of the precious metal out of circulation is sure to create quite a few sleepless nights for Jamie Dimon's PM manipulation club, who may suddenly find itself with a massive short position covered by even less actual deliverable, bringing the much anticipated monumental short squeeze one day closer. For all those wondering just how the silver market is manipulated and why control over the precious metal is so critical, we refer to a previous post: A Deep Insider's Walkthru To Silver Market Manipulation.

Here are some observations on Sprott's latest offering from the Financial Post:

As the name suggests, the issuer will use the proceeds to invest in physical silver bullion. "The Trust seeks to provide a secure, convenient and exchange-traded investment alternative for investors interested in holding physical silver bullion without the inconvenience that is typical of a direct investment in physical silver bullion," states the prospectus.

The document offers a number of reasons to invest in physical bullion: It's convenient, all the proceeds will be invested in physical silver; the silver will be stored at the mint and the trust will be able to secure lower transaction costs than investors doing it themselves. But the fund is geared to those who like their income in the form of capital gain; the trust does not intend to pay any dividends.

But one wrinkle is that once a month, unitholders will be able to redeem all or some of their units and receive physical silver. It's not immediately clear why a unitholder would want to do that, other than to provide unitholders with comfort that they can get their hands on the metal.

From Sprott's perspective, the hope is that its silver deal does better than a deal launched last year by Claymore Investments. That fund, which is not actively managed, was formed "to replicate the price performance of silver bullion, less the Fund's expenses and fees." The fund sold 3.6 million units--for gross proceeds of $36-million. Later, when the warrants were exercised, the issuer had about 7.1 million units outstanding. That fund, which hedges its US$ exposure, doesn't pay a dividend.

That fund didn't allow for annual redemption whereby the unitholders could receive physical silver. Instead it did offer an annual redemption where unitholders could receive net asset value -- less some expenses --in cash.

And some investors have taken advantage of that feature. For instance, Bermuda-based Osmium Special Silver Situations Fund announced earlier this month that it owns a 16.37% stake in the trust and has requested that they be redeemed. This new silver offering comes a few months after Sprott Physical Gold Trust raised US$442.5-million in its initial public offering via the sale of units at $10 a shot. Last month the same issuer did a follow-on offering and raised another US$279.5-million from the sale of units priced at US$11.25. Last year, Claymore Gold Bullion Trust started the process when it sold units with each unit consisting of a unit and a warrant: When the warrants were exercised, the issuer ended up with more than 83 million units outstanding. Later the entity was converted to an exchange-traded fund.

One reason for the popularity of funds that invest in physical metals is the favourable tax afforded U.S. institutions. The prospectus talks about the capital gains advantages for such buyers: The tax rate is 15% (though it will rise to 20% by year end) on such investments compared with the normal 28% tax rate. On Claymore's gold offering, more than one-quarter of the proceeds came from U.S. institutions -- an unusual situation given that most have an in-house investment management capability -- and prefer to do it themselves than pay some external manager.

For readers who would like to familiarize themselves with the silver industry, and also a tremendous reference for all those already invested in the silver market, we recommend the following section from Sprott's prospectus: Overview Of The Silver Industry.

We are confident this latest offering by Sprott will be a tremendous success in an age when actually having recourse to the assets that support a given intermediary, be it cash or stocks, is given increasingly greater value. Next up from Sprott: The Sprott Physical Bunker Trust , The Sprott Physical Spam Trust , The Sprott Physical Pitchfork Trust and, last but not least, the The Sprott Physical M-16 Trust.

Did you read the article? The Sprott trust only holds physical gold, and you can redeem shares for actual metal. Sprott is the closest thing to physical out there that isn't actually bullion in your hands.

"An investor in the fund may take physical delivery of a minimum of one 400 ounce bar by contacting the fund on the 15th of each month outlining the details of the delivery request including number of bars and so forth.It’s up to the holder to make arrangements for delivery and this can be cumbersome.However, an investor may opt to arrange with Brinks or another armored car service to pick-up the gold and transfer it to another storage provider who will take and hold London Good Delivery bars.Currently this might cost $2500 per bar which isn’t that costly given prevailing value of a bar at around $450,000.Or, if you’re feeling man enough, you can pick bars up yourself and toss them in the trunk of your mini.Um, bring your shotgun."

Actually Central Fund's " Silver Bullion Trust " is the closest thing to physical. They were first out of the gate and have the lowest admin fees of any silver fund in the world. Trades on TSX as SBT.un

On March 25th at the CFTC Public Hearing on Precious Metals GATA made a dramatic revelation of a whistleblower source, Andrew Maguire, who has first hand evidence of gold and silver market manipulation by JPMorganChase and who has even tipped off the CFTC in advance of manipulative attacks on gold and silver. Just as in the Madoff case the regulator has done nothing to stop such manipulation.

On March 26th while out shopping with his wife, Mr. Maguire's car was hit by a car careening out of a side road. The driver of the vehicle then tried to escape. When a pedestrian eye-witness attempted to block the driver's escape he accelerated at him and would have hit him had the pedestrian not jumped out of the way. The car then hit two other cars in escaping. The driver was apprehended by the police after police helicopters were called in and following a high speed chase.

Andrew and his wife were hospitalized with minor injuries. They were discharged from hospital today and should make a full recovery.

Those guys, along with Tyler Durden are frickin legends. Never mind 'Dirty Deeds Done Dirt Cheap' cause they'll be blaring "Big Balls' themselves. These guys are the Andrew Jacksons of our time. Air fives to all of you

This is a fantastic idea and I genuinely hope it is one that will hasten the day of reckoning for the silver manipulators. I'd like nothing better than to see JPM totally financially destroyed, even if it means (as I know it would) the possibility of printing of Trillions of new dollars and the certainty of a declaration of force majeure. Reality is the only path to recovery here, and only breaking the oligarchy can cause reality to come to the fore. Let the people see what's really going on.

From what I read, there are fewer physical ozs of Silver "above ground" than ozs of Gold. But, with Silver at +/- $18, it would not take too much money to buy up a substantial amount. And Silver is used, and not all that is / can be recycled.

Sprott may have just lit the fuse that sends Silver way up. Sprott the man.

COMEX Warehouse Stocks July 13, 2010Today we saw a massive drain of comex silver to the tune of 196,148 oz.On top of that, there was another of those special announcements which saw an internal transfer of 130,000 oz from the customer inventory into the dealerinventory. This is a lease and we have no idea what the customer received for that lease.

" Once the silver market was cornered, outsiders joined the chase but a combination of changed trading rules on the New York Metals Market (COMEX) and the intervention of the Federal Reserve put an end to the game. The price began to slide, culminating in a 50% one-day decline on March 27, 1980 as the price plummeted from $21.62 to $10.80. "

I understand your point, and if he were playing the paper game I would agree with you. The Hunts were successful when they took physical silver. They were broken when they tried to use leverage in paper silver. I am sure Sprott knows this and won't play their game.

I suspect "he" won't break anyone. Because when this begins to get out of hand, the "National Security" card will be pulled out along with a few Jokers and Sprott and investors will be handed physical fiat and ordered to hand over their physical Gold and Silver.

We really can't be thinking these Powers That Be Ponzi guys will just hold up their hands and surrender, do we? Really?

My apologies if I came off as flippant. I didn't really think you were saying the PTB would give up easily or without a fight but I worried that some readers might take that away from your comments.

I agree that breaking the link between paper and physical is key because it exposes the scam. And I've personally purchased a large amount of Silver because I feel that physical Silver has a much smaller chance of being taken/confiscated from me than my Gold. And the Gold I purchase is in ounces or smaller, so that it will be easier to barter/exchange for goods and services on the black market that is coming soon to your local street corner.

CD, doesn't the fact that Sprott is located in Canada provide him some protection from the US jackboots that would force confiscate in exchange for Fed TP were he here? Were he leading a physical silver squeeze, that is...

The silver fund's minimum requirement for physical redemption is approximately 10,000 ounces or +/-$200,000 initial investment. There is also an additional clause giving the Trust power to revoke physical redemptions.

It might. But it's clear that Canada is connected politically with the USA and if the USA demands Canada protect the USA "interests" I suspect Canada will do so. I have great respect for Canadian citizens but their government has turned a dark ugly corner over the past few years.

It also appears Canada is playing the same PM shell game so I suspect they will play along. I just don't see the international Ponzi folding without destroying those around them.

CD - good points if i might say, but in my humble view this game will soon be over...not because of Sprott but because of 6000 years of history....government always tried but at the end....it seems the game will be over soon

I agree. We need them to expose themselves for what they are. But as I pointed out in my "Welcome to the Insane Asylum" series, the conditioning of our insanity is extremely deep. And once people's backs are against the walls, many have a tendency to defend their tormentor and stone those who bring them freedom.

I simply wanted to point out that to expect the PTB to collapse and give up is not realistic. I know the Internet Tough Guy wasn't really saying that but I feared many others reading the comment might think so.

"Unitholders whose units are redeemed for physical silver bullion will be entitled to receive a redemption price equal to 100% of the NAV of the redeemed units on the last day of the month on which the NYSE Arca is open for trading for the month in respect of which the redemption request is processed. Redemption requests must be for amounts that are at least equivalent to the value of ten London Good Delivery bars or an integral multiple of one bar in excess thereof, plus applicable expenses. A "London Good Delivery bar" weighs between 750 and 1,100 troy ounces (approximately 23 to 34 kilograms) and usually are approximately 1,000 troy ounces. Any fractional amount of redemption proceeds in excess of ten London Good Delivery bars or an integral multiple of one bar in excess thereof will be paid in cash at a rate equal to 100% of the NAV of such excess amount."

Or, a +/-$200,000 initial investment in order to qualify for physical delivery. Units are also redeemed on an end-of-month NAV basis.

ps

Another section of the prospectus mentions receiving a redemption price equal to 95% of the NAV of the redeemed units. Correct me if I'm wrong, but I also understood that the remaining 5% was used as payment-in-kind in bullion form for initial transportation to the mint. Assuming a rising price environment, it would mean that price differential from purchase to redemption is bled off to an indisclosed 3rd party.

The hassle of confiscating silver from individual collectors is eliminated. One pen stroke and the whole kit and kaboodle is redeemed for a non-negotiable fixed rate of fiat currency.

IMHO, the physical redemption requirements make this product is primarily targeted towards institutional clientele. Moreover, the NAV mechanism may be conducive to lower a MER but in a falling commodity environment presents a considerable liquidity trap (the 1979 spike looks like it lasted what, 3 months? Assuming past=future, I'd have to sell after 2 good months in order to ensure a decent NAV). Finally, the 5% rake on cash redemptions is on par with real estate commissions.

We really can't be thinking these Powers That Be Ponzi guys will just hold up their hands and surrender, do we? Really?

A strategy like that would have left the Pacific in the hands of the Japanese in the 1940s. But just because those guys never surrendered didn't mean that they couldn't be beaten. The Powers that Be can be taken down in due course just like anybody else.

First they will try to defame and ridicule him and his funds. That will be the setup to taking everything. Something similar happend with Ron Paul coins a couple of years ago where the PMs were confiscated as "counterfeit" or something and I haven't heard of anything since.

Not trying to sound like a Debbie Downer, but what makes anyone here so sure the prices won't be manipulated right before physical redemption? Apparently happens with all the others, no?
Also, I thought the PM bugs loved the feel of the physical stuff. Loved to know where it was at all times. Loved it's portability.

why would the SEC approve of Sprott's REAL gold and now Sprott's REAL silver funds for US listing, if these funds would only frustrate the FED/JPM efforts?

Here's a theory that's probably wrong but what the hell.

It's almost impossible for the regulators to suddenly discover PM manipulation at this point in time. It's gone on blatantly for so long and if the regulators were to suddenly declare that manipulation is and was taking place without some big event to spur on the announcement they'd look at best foolish and at worst complicit.

If thet allow Sprott to open these funds and these funds help set off a chain of events which reveals the manipulation for all to see, then the regulators can point to the now obvious smoking gun and cry out, "Look at the manipulation which has come to light! We knew nothing of this but now we shall certainly act."

It's possible that at this point the regulators are actually anxious to end the charade as it has grown so large but they don't know how to do it.

you might be into something....either sprott associates might have employed their consultant services - or they were just not paying much attention to their work while busy seeing the movies....

really....the game is coming to an end soon....sprott or not.....i think they are at a point when they want a sprott to come and take them out of their misery....with all these crises after crises you reach a point when wanted to be over with....let it explode and see what happens....to hell with it...cant take it anymore...i think thats where they are for all the glory that we think for the outside

Lets not also forget that Central Fund has also has a pure silver investment vehicle called Silver Bullion Trust that also holds approximately $75 MM in silver in Canadian Vaults. Quite frankly I prefer this over Sprott's new silver fund becuase Central Fund has a 40 year track record and becuase it has lower administration fees.

Coins. 1 OZ yankee doodle coins with an eagle on them. You want a picture?

I got some gold ones as well with eagles and other weird stuff on them. You want a pic of them? Should I calculate what I am up this year on those? Or would that make you unhappy.

I think you already know the answer to the metric and are being coy and will point out that I haven't made anything until I sell them blah, blah. The point is not to sell them unless necessary. It's called an insurance premium that you pay once. A hedge. Peace of mind. It's a store of wealth that I can take on a plane or boat when you are trying to buy roadkill at $100 a pound.

We are confident this latest offering by Sprott will be a tremendous success in an age when actually having recourse to the assets that support a given intermediary, be it cash or stocks, is given increasingly greater value.

Agreed - tranparency, accountability, culpability - all are virtues to be rewarded...

Units are being offered to investors who are prepared to invest a minimum initial subscription amount of $1,000. The Trust's units are listed on the NYSE Arca and on the Toronto Stock Exchange, to which we will refer as the TSX, under the symbols "PSLV" and "PHS.U", respectively.

JPM is acting for the US Gumment. This is a hangover from the Silver Users Association [Kodak, etc] and then coupled with the breaking of the Bros. Hunt. It’s as idiotic and dated as our military strategies since WW 2.

With all due respect to the honest folks who rightfully choose to invest in gold and silver in the hopes of wealth preservation...

If its not in your hands of buried in the ground, its not safe. With all the power and influence the fronts known as JPMorganchase and GS command, and the track record of our fine leaders to be the best leaders money can buy, I think one has to be extremely wary of a sudden and unexpected tax upon withdrawal or outright confiscation of these physical funds.

I smell another rat here, another unwitting group of bagholders who won't be sharing in the last laugh. I'm probably wrong but one should always err on the side of safety.

But institutions, pension funds, hedge funds are unlikely to be stopping by the coin dealers. They want institutional funds. Like Sprott's.

We are just excited that there is a new vehicle now to channel $billions into REAL silver for institutions, who will get a 15-20% tax rate--much better than SLV @ 28%. Physical redemption clauses are a clear advantage over SLV for more conservative investors.

This would piss Jamie Dimon off, which would make me very happy.

This would encourage flows from SLV to PSLV. It would encourage new silver investors to take the preferable tax consideration in PSLV over SLV (but a PSLV premium would soon emerge to negate the marginal tax benefit).

JPM et al may have bigger fish to fry but the silver market is a lynch pin in the system that once removed will cause cascading other problems.

Don't worry, they will anounce a huge silver discovery (giga ounces) in the Gulf of Mexico left over from Montezuma. No one will get to see it of course, but it will be given to the IMF or BIS and they will of course sell it to highest bidder (except Sprott).

“in 1900 there were 12 billion ounces of silver in the world. By 1990, that figure had been reduced to around 2.2 billion ounces,” and now “today, there are less than 1 billion ounces in above-ground refined silver.”

Is Sprott secretly trying to become a central bank backed by gold/silver? The way it should be? Maybe we can dismantle the flawed FED after all is said and done? The new American currency will be Sprott Reserve Notes?

James Turk's Goldmoney is the only bank I know of in existence right now. Still, I would think of Sprott's trust fund as more of a place to store wealth than these other entities we incorrectly call banks.

Btw, Goldmoney has grown beyond the billion dollar barrier. Is that bigger than Sprott's?

Funny, at the top of this thread I was noticing all the junks on pretty innocuous comments. I was expecting to see Bravo pop up. But no. Lo and behold, it's our latest and greatest P.O.S. troll: abiggs.

At least Bravo adds some support for his argument in with his bashing.

JPM will not be able to stop the upcoming currency "event". When confidence is lost in any "con" the game is up. For the arrogance of a few at the expense of many... It seems that we as a society will never learn the tenets of humanity. Peace, love, respect, and honesty have been thrown to the wayside. Replaced by greed, hate, violence, and self. The lies these men have told reach to the heavens and will be revealed for all to see.

In add'n to the new Sprott silver vehicle, the Central Fund guys (Spicer family et al) also have Silver Bullion Trust up and running. SBT_U (TSX) and SVRZF OTC. Sells at small premium over NAV, occasionally at or slightly below NAV. Synthetically owning it plus GTU gives you the same as CEF but cheaper.

Agreed. Silver Bullion Trust is the better way to play the silver game. After heavy due dilligence this is the way I personally invest in silver. I think Sprott's biggest downfall will be an unfavorable tax ruling for its U.S investors. Expect to pay 28% not 18%.

Lots of folks keyed on Sprott's gold reserves being held in Canada...but anyone want to comment on the risk of confiscation of THE SHARES versus the physical?

I mean, if PHYS is the safest thing to hold in your IRA without actually closing it out--does the U.S. govt even NEED to confiscate the physical in Canada? They just "trade" me my ownership of my shares for future "payback" in the Social Security Ponzi scheme...right? If they nationalize my bank, and I don't see it coming, my gold got stolen just as easily as if I was holding GLD--doesn't matter to me who robbed me, an ETF manager or Ben Bernake...

I'll assume you have some physical. If that is the case and unless there is a worldwide confiscation of Gold then it follows what you hold in your hand will be worth an arm and a leg if the US govt stole your virtual stash.

Guys. Sprott is just playing on peoples fears by creating a redemption option, they know the actual redemptions will be minimal and they get to have a differentiator vs all the other gold etf's out there. Its brilliant really. Thats why you should buy sprotts actual company shares so you benefit from the aum growth in all his etf's and hedge funds,etc. He's a smart mo-fo.